A robust estimation of the terms of trade between the United Kingdom and British India, 1858-1947

This paper conducts a robust estimation of terms of trade between United Kingdom and British India over the period 1858 to 1947. The trend estimate of the terms of trade is measured using a novel econometric method due to Perron and Yabu (2009a) that is robust to the presence or absence of a unit root in the data. A further novel econometric procedure due to Perron and Yabu (2009b) for detecting a structural break is carried out allowing one to be completely agnostic to the underlying order of integration of the data. Taking into account transportation costs during this period, we conclude that there is no clear evidence whether the terms of trade improved for the United Kingdom with British India during the period considered.